HSBC Bank Taiwan Ltd (匯豐台灣商銀) holds an upbeat outlook about the growth of sustainability-linked loans (SLL), because higher electricity rates would provide a new incentive for companies to reduce power use, the bank told the Taipei Times in an interview.
The higher electricity rate took effect yesterday.
The amount of SLLs approved by HSBC Bank Taiwan grew eight times year-on-year in the first half of this year, the bank said without disclosing the figure.
Photo: Bloomberg
SLLs are different from regular corporate loans in that the debtor needs to set a few targets related to its environment, social and governance (ESG) practices with the bank and if the debtor meets the targets, it would be granted rewards such as discounts on the interest rate.
HSBC Bank Taiwan usually requires its clients that hope to take out a SLL to set three targets and at least 80 percent of the targets are related to environmental issues, such as power consumption and waste water management, commercial banking head Stanley Hsiao (蕭仲程) said in the interview.
With the electricity rate for heavy industrial users rising 15 percent yesterday, many companies would be incentivized to review their manufacturing processes to see whether there is room for reducing power use to save on electricity bills, Hsiao said.
SLLs would be suitable for these firms, as they could set targets for power conservation and once they meet the targets, they would obtain financial rewards, he said.
Although SLLs are often associated with green loans, the two types of loans are fundamentally different because the bank does not restrict the use of the proceeds of SLLs to environmental projects, Hsiao said.
SLLs are more like short-term corporate loans and perhaps because of the comparative flexibility in the use of the funds, they have expanded more rapidly than green loans worldwide, he said, adding that the growth rate is 400 percent to 800 percent.
“Among all our funding linked with the ESG concepts, green loans make up about only 10 percent, while SLLs account for about 80 percent,” Hsiao said.
Meanwhile, HSBC Bank Taiwan is considering reviewing its SLL mechanism to encourage corporate clients to set more challenging targets, he said.
“Currently, one year after we approve the loan, we review whether the debtor has met the targets, but we are also thinking about more challenging targets that might not be reached in one year,” Hsiao said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, has decided to slow down its 3-nanometer chip production as Intel Corp, one of its major customers, plans to push back the launch of its new Meteor Lake tGPU chipsets to the end of next year, market researcher TrendForce Corp (集邦科技) said yesterday. That means Intel has canceled almost all of the 3-nanometer capacity booked for next year, with only a small amount of wafer input remaining for engineering verification, the Taipei-based researcher said in a report. Based on Intel’s original schedule, TSMC was to start producing the new chipsets in
DATA SHOW DOWNTURN: Manufacturing in Taiwan contracted as production and demand slumped, while growth in chip exports last month eased in South Korea World chip sales growth has decelerated for six straight months in another sign that the global economy is straining under the weight of rising interest rates and mounting geopolitical risks. Semiconductor sales rose 13.3 percent in June from a year earlier, down from 18 percent in May, data from the global peak industry body showed. The slowdown is the longest since the US-China trade dispute in 2018. The three-month moving average in chip sales has correlated with the global economy’s performance in the past few decades. The latest weakness comes as concern about a worldwide recession has prompted chipmakers such as Samsung
Italy is close to clinching a deal initially worth US$5 billion with Intel Corp to build an advanced semiconductor packaging and assembly plant in the country, two sources briefed on discussions said yesterday. Intel’s investment in Italy is part of a wider plan announced by the US chipmaker earlier this year to invest US$88 billion in building capacity across Europe, which is striving to cut its reliance on Asian chip imports and ease a supply crunch that has curbed output in the region’s strategic auto sector. Asking not to be named due to the sensitivity of the matter, the sources said the
Malaysia is scrambling to protect its assets as the descendants of the last sultan of the remote Philippine region of Sulu look to enforce a US$15 billion arbitration award in a dispute over a colonial-era land deal. In 1878, two European colonists signed a deal with the sultan for the use of his territory in present-day Malaysia — an agreement that independent Malaysia honored until 2013, paying the monarch’s descendants about US$1,000 per year. Now, 144 years later after the original deal, Malaysia is on the hook for the second-largest arbitration award on record for stopping the payments after a bloody incursion